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Securing Your Financial Future
Debt
A) Removing the Veil
1. Debt has been ___sold___ to us in so many different ways and so
aggressively that most people can’t even imagine living without it.
Romans 12:2 NKJV
And do not be conformed to this world, but be transformed by the renewing of your mind, that
you may prove what is that good and acceptable and perfect will of God.
2. Debt is buying things ___today___ with ______tomorrow’s______ money.
Hebrews 13:5 NKJV
Let your conduct be without covetousness; be content with such things as you have. For He
Himself has said, "I will never leave you nor forsake you."
3. Prioritizing luxury, comfort, convenience, and pleasure leads to __debt__.
Luke 12:15 NKJV
And He said to them, "Take heed and beware of covetousness, for one's life does not
consist in the abundance of the things he possesses."
Proverbs 21:17 NKJV
He who loves pleasure will be a poor man; He who loves wine and oil will not be rich.
4. Debt is often a _____symptom_____ of more significant issues.
Mark 4:19 NKJV
and the cares of this world, the deceitfulness of riches, and the desires for other things
entering in choke the word, and it becomes unfruitful.
5. The ___truth___ is that a borrower is _____servant_____ to the lender.
Proverbs 22:7 NKJV
The rich rules over the poor, And the borrower is servant to the lender.
Matthew 6:24 NKJV
"No one can serve two masters; for either he will hate the one and love the other, or else he
will be loyal to the one and despise the other. You cannot serve God and mammon.
6. You don’t _____deserve_____ anything you can’t pay cash for.
Probably the world’s greatest humorist was the man who named them “easy payments”
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Debt
7. Debt will hinder you from achieving your full _____potential_____.
8. Debt is an ___enemy___ to your family’s well-being.
“70% of people say they are carrying enough debt to make their home lives unhappy.”
9. You need to have a ______conviction______ toward debt.
10. As the world continues to _____degrade_____ it is more important that you
dump debt.
11. Paying off debt will be the best ______investment______ you ever made.
http://www.daveramsey.com/store/index.ep
Steps out of Debt
1. Put __God__ first.
2. You must ___save___ money.
3. Quit ______borrowing______ more money!
4. ___Sell___ something.
5. Take a ______part-time______ job or _____overtime_____.
6. Work a __plan__.
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
B) Facing up to your Debt: The Debt Snowball
Most people never get out of debt because they never plan to be.
1. List all your debts on the Debt Snowball Sheet from smallest to largest.
2. Always make the minimum payments on all your debts.
If you cannot make the minimum payments you need help now.
3. Get current on all your necessity bills, like housing and auto.
4. Take the amount you have budgeted for savings (after you have the $1000
in Reserve) and add it along with every other dollar you can lay hold of and
add it to the minimum payment of your smallest debt until it is gone.
5. Every time you pay a debt off add its old minimum payment along with all
your additional money to your next debt on the list. Every time a debt gets
paid off the snowball gets bigger and bigger.
6. The “New Payment” is the total of the previous debt payment plus the
current debt’s minimum payment.
The goal is to get out of debt in 18 to 24 months with intense focus. If your plan
will take longer then 2 years it is important that you get help. Having someone
look at your situation with a fresh set of eyes and becoming accountable is
important and for many people a necessity if it will take you longer then 2 years
to get out of debt.
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
EXAMPLE:
Tony and Lisa, 30 years old, have finally got sick of being broke. They are
committed to get out of debt! Using the debt snowball system they are gearing
up to get started.
Tony and Lisa downloaded the debt snowball calculator linked below.
Tony and Lisa have listed their debts below from smallest to largest.
They have already put $1,000 into their reserve fund after a garage sale
and having worked some extra hours.
They have worked out a budget that would allow them to save $300 per
month for retirement savings. They ditched the second car, cut their
cable package, and changed their insurance deductibles.
However, until their debts are paid off they are going to use the savings
they freed up to work the debt snowball until their debts are gone.
Debt Planning Worksheet
Total Interest Payment Minimum New
Lender Amount Rate (%) Due Date Payment Payment
1. Sask Energy 400.00 7th 50.00 350.00 (50+300)
2. Overdraft 1,000.00 19.0% 31st 15.83 365.83 (350+15.83)
3. Sears Card 1,300.00 28.8% 10th 39.00 404.83 (365.83+39)
4. Line of Credit 1,500.00 6.0% 31st 60.00 464.83 (404.83+60)
5. MasterCard 7,500.00 18.00% 10th 150.00 614.83 (464.83+150)
6. Student Loan 27,000.00 8.0% 22nd 325.73 940.56 (614.83+325.73)
Totals 38,700.00
Extra Money added to snowball 300
Payoff time with no extra money 84 months
Payoff time with extra money 51 months
http://www.vertex42.com/Calculators/debt-reduction-calculator.html
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
Count the Cost!
In 51 months, after their last debt payment, Tony and Lisa could start saving
$940.56/month. This investment if it earned 10% would be worth $2,400,000
at 65 years of age.
For __EVERY_ YEAR_ that Tony and Lisa delay getting out of debt and
investing the money they are spending on debt payments they are losing
approx $200,000 in potential value.
The sad thing is that most people never face up to their debt and they carry
debt throughout their working lives. What a cost!!
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
C) Credit “Bondage” Cards
“Always leave home without it”
Quickfacts:
The average household card debt has increased 167% in the past 17 years.
Total Canadian consumer debt is more than $1.3 trillion
__78%__ of people do not pay off their credit cards every month.
__45%__ of people only pay the minimum payment on their credit cards.
The average balance carried on credit cards is ___$7,500___.
o It would take _53_ years and cost $21,000 in interest to pay off this
average balance making minimum monthly payments of 2% at 18%
interest. Ouch!!!
_85%_ of people with debt say they have credit card debt.
69% of people who file bankruptcy say credit card debt caused it.
_80% of graduating college students says they have credit card debt.
People spend _12-18%_ more when using credit cards.
I have never met anyone in debt trouble that didn’t have credit card debt.
Consumer Reports says that __75%__ of people never redeem their points.
You don’t _need_ a credit card to build credit.
The pre-approved credit card offer is not because you ____earned____ it.
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
Read the small print:
Low rate cards often convert to high rate cards if you are late on a payment.
Credit cards often charge an extra fee if you go over the limit.
Credit cards often charge an extra fee if you are late with the payment.
Credit cards will often increase your limit without asking.
Credit cards can charge fees if you don’t use the card.
Credit cards can charge a fee for balance transfers.
The credit card industry takes in 43 billion per year in additional fees from the
consumer, late payment fees, over the limit fees, and balance transfer fees.
Late fees alone bring in more than 11 billion.
Recommendations:
Never, ever just pay the minimum amount. Just an extra __$10__ a month
could half the time and the interest cost.
A couple of easy to use Credit Card payoff calculators can be found here…
http://www.creditcanada.com/debtCalc.asp
http://www.fcac-acfc.gc.ca/iTools-iOutils/CreditCardCalculator-eng.aspx
Don’t __carry_ credit cards unless you are good with your money. Homework
Never use a card unless you have the cash in the bank TODAY to pay for it.
If you ever get behind on your card ___lock___ it up until you get caught up.
If you continually mess up get rid of it.
I don’t think __students__ should have credit cards.
Homework:
Review last year’s credit card, line of credit, and home equity line
statements, highlight all the interest charges, and fees, and add them
Probably the world’s greatest humorist was the man who named them “easy payments”
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Securing Your Financial Future
Debt
up.
Run these through your count the cost chart.
Probably the world’s greatest humorist was the man who named them “easy payments”
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